• Net Income: $76 million for the fourth quarter.
• Pretax Preprovision Income: Increased by 5% to $117 million.
• Return on Average Assets: 1.56% for the quarter.
• Efficiency Ratio: Approximately 52%.
• Total Loans Growth: $310 million, or 79.7% annualized.
• Core Deposits Growth: Up 2% sequentially.
• Nonperforming Assets: Record low of 61 basis points of total assets.
• Net Interest Income: $209.3 million, $7.2 million higher than the previous quarter.
• Net Interest Margin: Improved by 8 basis points to 4.33%.
• Provision for Credit Losses: $5.7 million higher than the previous quarter.
• Income Tax Expense: $20.3 million for the quarter.
• Effective Tax Rate: Just under 24% for the year.
• Full Year Net Income: $299 million.
• Full Year Earnings Per Share: $1.81, $0.10 higher than the previous year.
• Return on Equity: 19.1% on a GAAP basis.
• Allowance for Credit Losses: Decreased by $3.1 million to $244 million.
• Net Charge-offs: $24.6 million for the quarter.
• Tangible Book Value Per Share: Decreased to $9.91.
• Tangible Common Equity Ratio: 8.4%.

• Warning! GuruFocus has detected 4 Warning Sign with CNS.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• First BanCorp (NYSE:FBP) reported strong financial performance with a net income of $76 million for the fourth quarter of 2024.
• The company achieved a 5% growth in pretax preprovision income, driven by net margin income expansion and disciplined expense management.
• Total loans grew by $310 million, with significant contributions from consumer, commercial, and mortgage segments across Puerto Rico and Florida.
• Nonperforming assets reached a record low of 61 basis points of total assets, indicating strong credit performance.
• First BanCorp (NYSE:FBP) maintained a robust liquidity and capital position, with regulatory capital ratios significantly above well-capitalized levels.

Negative Points

• The provision for credit losses increased by $5.7 million compared to the previous quarter, impacting overall earnings.
• Consumer credit showed some weaknesses, with early delinquency increases noted in the consumer loan segment.
• The allowance for credit losses decreased, but the allowance on consumer loans increased due to recent loss trends.
• Expenses rose by $1.6 million from the third quarter, partly due to higher business promotion initiatives.
• The tangible book value per share decreased, influenced by a decrease in the fair value of available-for-sale investment portfolio.

Q & A Highlights

Q: On the 52% efficiency ratio for 2025, is there an assumption of Oreo gains included, and could these gains impact the ratio further? A: Yes, Oreo gains are included in the calculation. We expect to achieve some gains in the first half of the year, but these will significantly decrease by the second half of 2025. The focus will be on other expense components and income side improvements.

Q: How focused are you on maintaining the 52% efficiency ratio in 2025, and are there opportunities to adjust investments based on revenue outlook? A: We are committed to maintaining the efficiency ratio, supported by consistent revenue and margin improvements. We are not halting investments, particularly in technology and branch expansions, which are expected to bring long-term benefits.

Q: Can you clarify the expected net interest margin (NIM) improvement for 2025? A: We anticipate a 20 basis points improvement in NIM by the end of 2025 compared to the fourth quarter of 2024. This is based on reinvestment of the portfolio, expected deposit flows, and new loan productions.

Q: Regarding the remaining $60 million in redemption, is it likely that stock buybacks will resume later in the year? A: Yes, it is probable that stock buybacks will resume in the latter part of the year, following the completion of the remaining redemption.

Q: What drove the linked quarter deposit growth, particularly in public funds, and is this growth sustainable? A: The growth was driven by a strong strategy in cash management and payment services to government entities and reconstruction projects. While there is some seasonality, the growth reflects a combination of strategic initiatives and temporary inflows.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.